Brazil grows 4.6 percent in 2021 and leaves technical recession

The Brazilian economy grew 0.5 percent in the final months of 2021 — and is no longer in a technical recession. The annual expansion of GDP amounted to 4.6 percent, making it the strongest growth in a calendar year since 2010, with overall numbers recouping pandemic losses. 

New GDP data shows that the recovery in economic activity was slightly faster than market analysts expected. By the end of 2021, the median forecast by top-rated investment companies surveyed by the Central Bank sat at 4.5 percent.

Divided by sector, Brazil experienced growth in industry and services (+4.5 and +4.7 percent, respectively), while the agribusiness sector dropped 0.2 percent. Extreme weather conditions limited farmers’ gains in 2021, but the discrepancy among sectors is mainly because industry and services began last year at a weaker point.

Q4 growth removed the economy from a technical recession, after drops in Q2 and Q3. 

The Brazilian Institute of Geography and Statistics (IBGE) shows that demand has soared in the country. Family consumption was up by 3.6 percent, while government spending ticked up 2 percent. In 2020, the first pandemic year, they had shrunk by 5.4 and 4.5 percent, respectively.

“Government-backed stimulus programs helped boost family consumption, but their effect was limited by high inflation and rising interest rates,” says Rebeca Palis, a coordinator at the IBGE.The recovery was also uneven. Segments such as tourism and industries suffering from disruptions to global production chains continue to falter. Market analysts point to a continuing scenario of stagflation for Brazil in 2022 — a prediction further boosted by uncertainty raised by the presidential election and the war in Ukraine.

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